CHP 7
1. SEBI:
INTRO:
• SEBI was established as a non-statutory body in 1988, and as a statutory body in
1992.
• It is under the administrative domain of the Ministry of Finance.
• The Securities and Exchange Board of India (SEBI) is a regulatory body that
oversees the Indian securities and commodity markets.
• SEBI's primary functions are to: Protect investors, Regulate the securities market,
and Ensure the smooth functioning of India's capital markets.
• SEBI plays an important role in regulating all the players operating in the Indian
capital market.
• It monitors and regulates the Indian capital and securities market while ensuring
to protect the interests of the investors, formulating regulations and guidelines.
• The head office of SEBI is at Bandra Kurla Complex, Mumbai.
Objectives of SEBI:
1. Investor Protection: This is one of the most important objectives of setting up
SEBI. It involves protecting the interests of investors by providing guidance and
ensuring that the investment done is safe.
2. Preventing the fraudulent practices and malpractices which are related to
trading and regulation of the activities of the stock exchange
3. To develop a code of conduct for the financial intermediaries such as
underwriters, brokers, etc.
4. To maintain a balance between statutory regulations and self regulation.
• Regulating Capital markets through preventive measures
• Encouraging the formation of self-regulatory organizations
• Regulating the functions of stock exchange and security markets
• Formulating rules to prevent malpractices within the system
• Managing and controlling complaints division
• Promoting learning opportunities for investors
FUNCTIONS OF SEBI:
• SEBI is primarily set up to protect the interests of investors in the securities market.
• It promotes the development of the securities market and regulates the business.
• SEBI provides a platform for stockbrokers, sub-brokers, portfolio managers, investment
advisers, share transfer agents, bankers, merchant bankers, trustees of trust deeds,
registrars, underwriters, and other associated people to register and regulate work.
• It regulates the operations of depositories, participants, custodians of securities, foreign
portfolio investors, and credit rating agencies.
• It prohibits insider trading, i.e. fraudulent and unfair trade practices related to the
securities market.
• It ensures that investors are educated on the intermediaries of securities markets.
• It monitors substantial acquisitions of shares and take-over of companies.
• SEBI takes care of research and development to ensure the securities market is efficient
at all times.
• SEBI Act and SEBI Guidelines
• As per the SEBI Act 1992, it covers the following things:
• ● Actions and composition of SEBI Board members
● Board’s functions and powers
● SEBI’s fund sources (grants made by Union Government)
● Rules on penalties
● Norms associated with the anti-money laundering
● Defining SEBI’s judicial authority
● Union Government’s extent of powers to supersede it
• SEBI also has to follow guidelines for specified areas, including:
● Employee stock option schemes
● Disclosure & investor protection norms
● Initiating trading terminals overseas
● Legal proceedings
● Listing & delisting of securities
Purpose and Role of SEBI:
The main purpose of the formation of SEBI was to keep a check on malpractices and
protect the interest of investors. Simply put, SEBI was set up to fulfil the needs of
three groups, which are:
• Issuers. SEBI provides a marketplace for issuers in which they can raise finance
easily and fairly.
• Investors. SEBI provides protection for investors and supplies accurate and correct
information.
• Intermediaries. SEBI provides a competitive professional market for intermediaries.
2. NSCCL:
INTRO: The National Securities Clearing Corporation Limited (NSCCL), now known
as NSE Clearing Limited, was India's first clearing corporation and the first to offer a
settlement guarantee.
• Incorporation: Incorporated in August 1995
• Ownership: A subsidiary of the National Stock Exchange (NSE)
• Function: A clearing and settlement agency for all deals on the NSE's Derivatives
(Futures & Options) segment
• Role: Acts as a legal counter-party to all deals on the NSE's F&O segment,
guaranteeing settlement
NSE Clearing Limited (National Clearing) formerly known as National Securities
Clearing Corporation Limited (NSCCL), a wholly owned subsidiary of NSE,
was incorporated in August 1995.
OBJECTIVES:
1. Providing and maintaining the confidence in clearing and settlement of securities
2. Providing a counter-party risk guarantee
3. Offering and maintaining short and consistent settlement cycles
4. Managing risk through a secured risk containment system
5. To facilitate the clearing & settlement of securities
6. Ensuring strict short-cycle settlements
7. Offering counter-party risk guarantee for concerned parties
8. Facilitating a robust risk-addressing system
9. to bring and sustain confidence in clearing and settlement of securities;
10. to promote and maintain, short and consistent settlement cycles;
11. to provide counter-party risk guarantee.
FUNCTIONS:
• Clearing and settlement: NSCCL clears and settles trades executed on the National
Stock Exchange (NSE). It acts as a legal counterparty to all deals on the NSE's F&O
segment.
• Risk management: NSCCL manages risk and operates a risk containment system.
• Deposit and collateral management: NSCCL manages deposits and collateral.
• Settlement guarantee: NSCCL provides a counterparty risk guarantee and ensures
settlement.
• Settlement cycle: NSCCL operates a well-defined settlement cycle.
• Connectivity: NSCCL is connected to depositories for electronic settlement of
securities.
• Banking services: NSCCL has clearing banks that provide banking services to trading
members.
3. NSE ORDER BOOK: (TXTBK)
•
The National Stock Exchange of India's (NSE) order book is an electronic list
of buy and sell orders for securities that are organized by price level.
• The order book is used to match orders placed by investors with limit orders,
which helps maintain anonymity in the financial market.
• As and when valid Offers are received by the system, they are first numbered,
time stamped, and stored in the book.
• Each offer has a distinctive offer number and a unique time stamp on it.
• All the Offers placed in the system will remain outstanding till the last day of
the book building process.
TYPES OF ORDER BOOKS (TXTBK)
4. TYPES OF MARKET UNDER NEAT SYSTEM: (TXTBK)
NEAT stands for National Exchange for Automated Trading and is a screen-based
trading system that allows investors to trade on the National Stock Exchange of India
(NSE). NEAT is a client-server based application that provides a high-speed trading
platform for investors to trade in equity, derivatives, and currency segments.
Features :
Trading Investors can trade from anywhere at any time
using a computer or mobile device.
Speed NEAT is a high-speed, low-latency trading system
that can handle large trading volumes.
Transparency NEAT provides transparency in the market.
Scalability NSEIFSC's scalability allows it to add additional
hardware to support higher trading volumes.
Availability NEAT is normally made available for trading on
all days except Sundays and other holidays.
